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A recent decision of the Ontario Superior Court of Justice – Blair v Tarion Warranty Corp. (Tarion) – confirmed that warranty claims under the Ontario New Home Warranties Plan Act (ONHWPA) can only be pursued by the current owner of a home.

The appellant, Blair, took possession of the subject property in February 2010 and complained to Tarion with respect to insufficient heating in the home. Tarion conducted an investigation that was completed in the summer of 2012 and concluded that duct modification needed to be completed.

After the investigation, in November of 2012, Blair installed within her condominium unit, a gas fireplace at a cost of $17,000.00. This installation was completed without the approval of Tarion. Blair claimed the cost of installation but Tarion denied compensation on February 28, 2013.

Blair appealed the refusal of reimbursement to the Tribunal. During the proceedings, Blair disclosed that she had sold the subject property on October 15, 2013. However, Blair stated that as part of the agreement of purchase and sale she had entered a collateral agreement with the purchaser to maintain her claim against Tarion. The Tribunal dismissed the appeal stating that when Blair sold the subject property she lost standing to continue her action against Tarion.

In this appeal, Blair alleged the Tribunal failed to recognize that the collateral agreement assigned the rights of the current owner to Blair.

Blair relied on the decision of the Tribunal in Liddiard v Tarion Warranty Corp., which included the following statement:

Nothing in this decision should be constructed as denying the Applicants the right to approach the current owners of the home and to seek some form of assignment of their claim.

Liddiard v Tarion Warranty Corp. was appealed to the Divisional Court where it was confirmed that a warranty “runs with the home”. The ONHWPA does not extend warranty coverage to previous owners. Additionally, the consumer protection nature of the ONHWPA is best served though fixing buildings and not compensating individual owners.

The court noted that the claim presented by Blair only dealt with the installation of the fire place and not with the insufficient heat provided to the unit. The current owners never assigned the right to pursue a claim with respect to the insufficient heat, such assignment would violate s. 13(6) of the ONHWPA.

In this case, the court concluded that as the purchaser of the subject property from Blair had no right with respect to the fireplace claim against Tarion, and therefore, such a claim could not be assigned. The purchaser acquired the property with the fireplace and benefited from its presence. Thus, when Blair sold the condominium unit she was compensated for the presence of a fireplace.

Tarion submitted that a previous owner of a home subject to warranty coverage may be compensated for an unresolved warranty claim without contravention of the statutory warranties framework so long as:

any warranty claims are pursued by the then owner of the home; and

the arrangements still allow for the possibility of the builder or Tarion to remediate any valid defect, as opposed to providing only for the payment of compensation from Tarion.

Tarion goes on to provide 3 examples of how such a resolution could be reached:

the purchase price could be discounted to reflect the uncertainty the purchaser may face with respect to the outstanding claim;

the purchase price of the home is set to reflect the price of the remediated home. The purchaser would pursue the warranty claim and retain any compensation paid. This may also include a risk mitigation clause in which the vendor would be entitled to a portion of the compensation received by the current owner above a certain amount; and

the vendor could provide Tarion with a signed appointment and acknowledgement explicitly stating that the vendor has been appointed an agent for and in the name of the current owner with respect to unresolved warranty claims. Additionally there should be provisions relating to accessing the home, and the authority of the agent. An agreement would need to be in place between the vendor and the current owner so that the vendor could recover any compensation granted to the current owner.

The consumer protection nature of the ONHWPA is for the protection of an owner or subsequent owner within the warranty period of a new home. This decision illustrates that although a previous owner may benefit from a claim brought by the current owner, the rights of the current owner to pursue an outstanding warranty claim may not be assigned.

A recently released Ontario Superior Court of Justice decision clarifies adverse possession claims with respect to property registered in Land Titles Conversion Qualified (LTCQ). The lands in dispute were converted to LTCQ on December 14, 1998. Here, “the critical time period is the time prior to the conversion of title into Qualified Land Titles”.

On October 22, 2004, the plaintiff purchased 322 King Street, Peterborough. The plaintiff had previously been a tenant of the property for a number of years. On December 22, 2000 the defendant purchased 320 King Street, Peterborough, which lies to the east of the plaintiff’s property.

The plaintiff asserted that the defendant no longer had a right-of-way over the easterly 8 feet of the plaintiff’s land. Additionally, the plaintiff asserted that possessory title had been established with respect to a triangular strip of land on the west side of the defendant’s property which had been enclosed by a chain-link fence, and a 6 inch encroachment on the defendant’s property caused by a garage constructed on the plaintiff’s land.

As of the date of registration, LTCQ lands are subject to:

the limitations, qualifications and reservations contained in subsection 44(1) of the Land Titles Act (Ontario) save and except for the provisions of subparagraph 11 (subdivision control), subparagraph 14 (dower rights);

the rights of any person who would, but for the Land Titles Act (Ontario), be entitled to the Lands or any part of it through length of adverse possession, prescription, misdescription or boundaries settled by convention; and

any lease to which subsection 70(2) of the Registry Act (Ontario), attached hereto, applies.

Although not discussed here, as of the date of registration, LTCQ lands are not subject to provincial succession duties and escheats or forfeiture to the Crown.

“Section 51(2) of the Land Titles Act preserves a possessory title if the length of possession that is necessary has elapsed by the time the conversion in the Land Title system takes place”. Therefore, the plaintiff had to establish that prior to December 14, 1998, the requirements of possessory title were satisfied.

To establish a claim of possessory title, the plaintiff must prove:

actual possession for the statutory period;

that such possession was with the intention of excluding the true owner; and

discontinuance of possession for the statutory period by the true owner.

An affidavit dated October 21, 1998, provided by the now deceased previous owner of the plaintiff’s land stated that:

the garage was constructed and used prior to the previous owner’s acquisition of title to the land in 1939. During the occupation of the previous owner the garage was used without interruption or interference;

the owners or owner of the defendant’s property had maintained a fence in the same location as the chain-link fence continuously for a period greater than 30 years;

that no part of the 8 foot right-of-way had never been used by occupants or other permitted users of the defendant’s land.

The court found the statements made in the affidavit to be reliable despite the inability of the evidence to be cross examined. The court also found that this evidence demonstrated that the garage and fence had been in place for at least 10 years prior to conversion into the Land Titles system. No evidence to the contrary was provided by the defence. The court granted a declaration that the defendant’s land was subject to the encumbrances of the plaintiff.

The court found for the plaintiff with respect to the defendant’s right-of-way over an 8 foot portion of the plaintiff’s land. The court was satisfied that prior to LTCQ registration the predecessors in title to the defendant’s land had abandoned the right. This was demonstrated through the affidavit evidence and the location of the garage and fence that blocked the use of the right-of-way. In the alternative, the court also noted that the right-of-way was granted in 1913 and ceased to be enforceable 40 years after its original registration.

the curtain principle, which stands for the proposition that it is unnecessary to examine the history of previous dealings with the land;

the mirror principle, which stands for the proposition that the Register is an exact reflection of the current state of title; and

the insurance principle, which stands for the proposition that the government guarantees the accuracy of the Registry and compensates those that suffer a loss as a result of inaccuracy.

The recent 2015 Ontario Superior Court of Justice decision, CIBC Mortgages Inc. v Computershare Trust Co. of Canada (the “Case”), appears to have altered the duties of mortgagees and purchasers in the Land Titles Registry with respect to the underlying principles.

In the Case, Computershare Trust Co. of Canada (Computershare), the first mortgagee, was granted a mortgage against the property by the owner of the subject property. The owner then acted fraudulently to discharge Computershare’s mortgage which gave the owner title to the property free of any encumbrances. CIBC Mortgages Inc. (CIBC), the second mortgagee, was then granted a mortgage on the property by the owner/fraudster believing that CIBC’s mortgage was a first priority mortgage on the property. Additionally, Secure Capital MIC Inc. (Secure Capital), the third mortgagee, was granted a mortgage to the property believing Secure Capital’s mortgage was a second priority mortgage.

The owner/fraudster continued to make payments on the Computershare mortgage to maintain the fraud. It was only upon default of the Computershare mortgage that the fraud was discovered. The Case was brought to determine the priority of the charges registered against the property.

It was determined that the Computershare mortgage was a valid charge that had been fraudulently discharged. The discharge was a void instrument as registration of a fraudulent instrument will not cure its defect. Both the CIBC mortgage and the Secure Capital mortgage were found to be valid instruments. However, the interest in the property granted to CIBC and Secure Capital could be defeated by a claim of a bona fide owner or mortgagee, namely Computershare.

CIBC and Secure Capital were considered intermediate owners, meaning that the mortgagees, as bona fide purchasers for value, gained an interest in the land from the immediate dealings with the fraudster and had the opportunity to discover the fraud. To rely on the Land Titles Registry, a party must demonstrate due diligence before registering a charge on a property. In the Case, the court considered that the intermediate owners should have at least inquired as to how the owners were able to pay out the Computershare mortgage given their current financial standing.

This decision at the very least erodes the principles that underlie the Land Titles Registry. No longer can a mortgagee or purchaser of interest in a property simply rely on the accuracy of the Land Titles Registry. To rely on the mirror and curtain principles, a mortgagee or purchaser of interest must demonstrate that the interest was acquired subject to a diligent examination into the history of previous charges and discharges on title. Additionally, due diligence must be demonstrated for remuneration from the Assurance Fund. Thus, due diligence appears to be a requirement for any reliance or protection afforded by the Land Titles Registry.

Of interest is the finding that, had a bona fide purchaser for value purchased the interest of the property from CIBC and Secure Capital, that purchaser would be said to hold title to the land better than anyone in the world. Thus, although a fraudulent instrument may not create good title to land, it is capable of establishing a chain to good title to land.

This decision is currently being appealed. The trial decision can be found by clicking here.

The HST new homebuyer’s rebate entitles qualified purchasers to a substantial rebate. The maximum federal and provincial portion of the rebate is $6,300 and $24,000 respectively.

A Tax Court of Canada decision released at the end of March has further clarified who can qualify for the rebate.

“[T]itle may be held by the buyer jointly with a specific blood relation, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships — even if the relative doesn’t live in the house.”

Here, an uncle was on title with his niece for mortgage financing purposes. As this relationship is not a category recognized by the legislation the purchaser did not qualify for the rebate.

“This means that if just one of the buyers does not qualify, even as the owner of a one percent interest in the property, none of the buyers can get the rebate.”

Recently, we have had more clients building mid and high rise condominiums apartment buildings with the intention of retaining title to the entire building and renting the suites. When a developer decides to keep title to the building for rental purposes, the developer assumes the role of landlord and enters into the realm of tenant protection legislation. Now, one expects tenant protection legislation to impact matters such as rental rates and increases but one wouldn’t expect it to impact decisions around building design and construction. However, recently we encountered a regulation with respect to billing tenants for electricity consumption that every rental property owner or developer needs to know. It is important to emphasize that this legislation potentially applies to all forms of rental buildings, regardless whether the residential suite in question is a condominium, townhome, single family home or suite in an apartment building.

(3) A suite meter provider shall not bill an occupant of a rental unit or a member unit based on the consumption or use of electricity by the occupant in respect of the unit, as measured by a suite meter, if,

(a) the suite meter was installed after the day this section comes into force but is not deemed under subsection 43 (2) to have been installed after the day this section comes into force;

(b) the unit is heated primarily by electricity; and

(c) the electricity measured by the suite meter includes the electricity used in heating the unit.

In simple terms, what this subsection is saying is that if electricity is the primary heat source for a rental suite constructed after 2010, the landlord of the unit will not be able to use a single hydro meter to meter electricity consumed in the suite and bill the occupant for such consumption. The logic behind this provision is highly questionable and now with the proliferation of packaged terminal air conditioner (PTAC) units providing heat, many of which are electric, it is a problem for developers.

Essentially, a developer has four choices if the developer chooses to heat a rental suite with a PTAC unit:

install a natural gas PTAC system if feasible given the building design and budget;

install two hydro meters, one to measure electricity consumption by the PTAC system and the other to measure consumption by the lights, plugs, appliances etc. and bill the tenant for both amounts;

separately measure and bill the consumption by the lights and plugs etc. in the residential suite with a single meter that does not measure the consumption of electricity by the PTAC system and include an estimate of the consumption by the PTAC system in the base rent; or

include all electricity consumed by the tenant in the base rent for the residential suite.

Obviously none of these options are ideal. In particular, there is a significant cost to having two meters. On the other hand, options (c) and (d) add exposure to the developer, especially as the PTAC systems are typically controlled within the residential suite and the rent cannot vary based on actual consumption.

And while none of the solutions are ideal, at least if a developer is aware of the issue, the developer can determine the best course of action during the planning stage of the building and avoid nasty surprises after the fact.

As noted, it is difficult to understand the thinking behind this provision. Options (c) and (d) do nothing to encourage conservation by tenants and impose risks on the developer that to a large extent are controlled by the tenant because the tenant will likely control the level of heating and cooling in the residential suite. Options (a) and (b) may not be feasible or cost effective. Regardless, developers need to be aware of the legislation and the impact it could have on their building and future operations.

Parkland dedication, or cash-in-lieu of land, has been a hotly debated topic between municipalities and developers for years. In a decision dated January 15, 2015, the Ontario Municipal Board (“OMB”) sided with developers saying that the Town of Richmond Hill’s parkland dedication rate, the cash-in-lieu equivalent argued to be $37,600 per unit, was too high.

The OMB ruling imposes a cap on how much the town can charge on new development: 25 per cent of the land being developed, or its value in cash.

“No matter how many units there are on the site, they are going to pay the same amount,” said Bassios. “The cap removes any relationship between a density increase and the parkland that they owe,”

With an appeal to the to the divisional court likely, this is a case we will be watching closely.

In our previous blog post we discussed phased standard condominiums. In this post we will offer part one of our discussion on common elements condominiums.

Common Elements Condominium Plans

A common elements condominium plan (“CECP”) refers to a condominium plan where the condominium property consists only of common elements. As such, there are no condominium units in CECPs. Instead of owning a unit in the condominium plan, as one would see in other types of condominiums, each owner in a CECP owns an undivided interest in the common elements of the CECP. Ownership of an undivided interest in the common elements of the CECP occurs when the owner of a piece of freehold land outside of the proposed CECP consents to having his or her land “tied” to the CECP. This consent is obtained at the time the CECP is being established. The owner’s freehold piece of land so tied to the CECP is referred to as a Parcel of Tied Land (“POTL”).

The POTLs tied to a CECP take the place of units for most purposes in the legal structure of a common elements condominium. However, the POTLs are not part of the CECP; the POTLs have and retain freehold tenure.

An example can help clarify how a CECP can be used. For this example, a developer wants to build a residential development with single family dwellings on half acre freehold lots and does not want to bring those lots into a condominium plan. The developer also wants to allow the owners of the freehold lots the use of a shared recreational facility, such as tennis courts.

The developer has decided for marketing or other reasons it would be beneficial to sell the homes as freehold estates instead of selling the homes as condominium units.

However, the developer, or the municipality which has to approve the development, is worried that the recreational facility will not be properly taken care of over the long run and, instead of adding value to the development, will detract value from it if the recreational facility is not under the jurisdiction of a condominium. The main concerns facing the developer or municipality are usually: 1) how is this recreational facility to be governed; and 2) how will the recreation facility be properly funded over the long term. Including the recreational facility in the CECP resolves these concerns.

In this example the recreational facility could be registered as the common elements of a CECP. The lots containing the single family dwellings would become the POTLs to the CECP. The owners of each single-family freehold home (the POTL) would own a freehold estate in his or her home and an undivided interest in the common elements condominium, which consists of the recreational facility.

The common elements condominium corporation, which is automatically created upon registration of the CECP, would :

manage the recreational facility;

be responsible for the maintenance and repair of recreational facility; and

collect the monies necessary to operate the recreational facility and to properly fund the recreational facility reserve fund from the owners of the POTLs.

The owners of the POTLs are obligated, on the same basis as if such owners were the owners of condominium units, to pay common expenses on account of costs of operating the CECP and to fund the reserve fund of the CECP as needed. As the POTLs are not part of the CECP, no costs related to the POTLs become part of the condominium budget.

CECPs are often useful in providing parking or in providing an access roadway to freehold parcels of land that do not otherwise have adequate legal or physical access to a public street. In this circumstance, only the parking lot or the roadway that leads to the freehold parcels of land would be in the CECP.

Take Home: Pros and Cons of Common Elements Condominium Plans

The greatest advantage of a CECP is allowing a developer to provide a shared feature or facility to a group of freehold parcels of land and have that shared feature or facility governed by the provisions of the Condominium Act. This ensures the governance of the shared feature or facility is regulated by the provisions of the Condominium Act and also ensures there are sufficient funds available to maintain, operate, repair and replace the shared feature or facility.

If the owner of a POTL fails to pay the common expenses attributable to his or her freehold parcel of land, the common elements condominium corporation has the right to register a common expense lien against the POTL. A common expense lien is a first charge against the POTL, ranking ahead of any mortgages on the property if properly processed.

The shared features or facilities in a CECP can include anything a developer seeks to have shared by the owners of the parcels of land. The most usual shared features and facilities are items such as access roads, parking facilities, recreational facilities, other amenities, retaining walls and/or noise walls.

Common expenses for common elements condominiums are usually much less than in other types of condominiums because the common expenses are only on account of costs relating to the shared facility, not the POTLs. As discussed in our blog on phased condominiums, currently only standard condominiums can be phased, therefore a developer is forced to register the entire CECP at one time. It is usually not practically possible to add POTLs to a CECP once the CECP is registered. It is also important to note that POTLs cannot be subdivided without an amendment to the condominium declaration. It is however possible, in some circumstances, to register a new condominium on top of a POTL.

In part two of our discussion on CECPs, we will look at how CECPs are treated under the Ontario New Home Warranties Plan Act and discuss some other aspects of such plans.

Our previous blog post discussed standard condominiums. This week we will offer a discussion on a specific type of standard condominium, phased condominiums.

Phased Standard Condominium Plans

As the name suggests, a phased condominium plan is a condominium plan that is developed and registered in stages. Currently the Condominium Act, 1998 (the “Act”) only allows standard condominiums to be phased. In phased condominium projects, there is one condominium plan which is expanded through amendments to the condominium declaration and description plans, with each new registration constituting a phase as new units are constructed. The condominium plan gradually increases in size as phases are added until the project is complete. This type of project is attractive to builders as they are able to balance sales of the units and registration of additional phases in order to ensure the project does not become over-extended. After each phase is registered the builder can complete the closing of the units in that phase which allows the builder to obtain sales proceeds to assist in constructing the next phase.

The registration of the condominium declaration which brings the first building(s) into the condominium plan is not the first phase. Our office usually refers to this first registration as the Initial Registration. The first “phase “is the next registration after the Initial Registration. Needless to say this causes confusion. Most people quite logically assume the Initial Registration is the first phase. It isn’t.

References in this blog to a “declarant” mean the person/company that registers the condominium. Often the builder is the declarant.

Typically phased condominium plans are made up of town homes but there are many examples of phased apartment building condominium plans and single family home condominium plans.

When considering undertaking a phased condominium project, it is important to note the first phase cannot register until title to the majority of the units in the Initial Registration of the condominium plan are no longer owned by the declarant and the declarant has delivered certain documents to the condominium corporation pertaining to the phase to be registered (this requirement applies to the first phase only, not subsequent phases). Furthermore, a phase cannot be registered until all facilities and services have been installed as required by the municipality to ensure the phase being added to the condominium can function properly even if the planned additional phases are never added to the condominium.

Phase Disclosure

There are specific disclosure provisions for phased condominiums. Section 147 of the Act requires that all purchasers be provided with disclosure statements which provide specific information on phasing, including whether the declarant intends to create one or more further phases, the projected timing of registration of subsequent phases and details regarding units, location of buildings etc.

The Act permits the condominium corporation to apply for injunctive relief or damages if the declarant proposes certain changes to the proposed phase from what was disclosed in the disclosure statement which are “material and detrimental”. This type of application could result in significant delays for a declarant, and as such a declarant who is uncertain about future plans for future phases should fairly and completely disclose all options for the project that the declarant is considering in its disclosure statement to purchasers to reduce the chances of this complication.

A successful injunction application by a condominium corporation does not necessarily preclude the registration of the proposed phase. It may simply mean the proposed phase will have to proceed as a separate condominium. The approval authority may have concerns with this result but if the declarant has carefully drafted the condominium documents with proper cross easements between the registered condominium and the lands being held for future phases the problem should not be insurmountable.

Take Home: Pros and Cons of Phased Condominium Plans

The most substantial benefit of a phased condominium plan is that phasing eliminates the requirement to have all proposed buildings in a standard condominium plan completed before the condominium plan can be registered. This allows a builder to build and close units in segments (and get proceeds of these sales) rather than having to wait for all of the proposed units in the condominium to be constructed before registering the condominium plan and transferring title to purchasers, allowing the declarant to start paying down their construction loan. This can dramatically reduce the amount of the declarant builder’s construction loan as he or she is only borrowing enough at any one time to build part of the proposed development.

A phased condominium can allow a declarant to post less security with Tarion. Rather than having to post security for the whole development (possibly at $20,000 per unit), the declarant is only required to post security for the units in the proposed phase. This is subject to the declarant not entering into any agreement of purchase and sale for units in phases not covered by Tarion.

The only significant drawback associated with phased condominiums is increased costs on multiple fronts for each phase due to the costs related to the registration of multiple phases, including application and approval fees, planner, lawyer, engineer and surveyor fees.

Finally, the individual unit sales agreements cannot be closed until the unit is built and registered within the condominium. As such, in order to justify the costs associated with each new phase, a sufficient number of agreements of purchase and sale need to have been entered into for the proposed units in the new phase. However, it often makes more financial and practical sense to create a phased condominium instead of multiple condominiums.

Our previous blog post offered an introduction to vacant land condominium plans. In this post we will examine standard condominium plans.

What is a Standard Condominium Plan?

A standard condominium plan is the traditional form of condominium that people tend to be most familiar with. Under previous condominium legislation in Ontario, only standard condominium plans could be created, as such, all condominium plans registered prior to May 5 2001 are standard condominiums. Under Ontario’s new legislation, the Condominium Act 1998 (“the Act”), a standard condominium plan is any condominium that is neither a leasehold condominium, nor any of the other types of freehold condominiums provided for in the Act (for example: common elements condominiums or vacant land condominiums).

Defining something by what it is not may not be very helpful, so what exactly is a standard condominium?

This type of condominium plan is typically comprised of completed buildings which are made up of units and common elements. Some common elements, for example patios attached to the units, may be deemed exclusive use portions of the common elements, meaning that use of those spaces is reserved for specific unit owners only. Other common elements may include exercise rooms, recreational facilities, roadways, green space and walkways. Notably, some units in a standard condominium can be left empty at the time of condominium registration, such as parking units, or units intended for commercial or industrial (not residential) use.

Finally, prior to the registration of a standard condominium plan all proposed buildings within the plan must be constructed to the level required by the Act regulations, which is also what forms the basis of “Schedule G” of a standard condominium plan. Schedule G includes an engineer’s or architect’s certificate (or combination), as to the status of the construction of the condominium’s buildings. A completed Schedule G must be included as part of the condominium declaration in order for the declaration to be registered along with the description plans.

Why Develop a Standard Condominium Plan?

One benefit of standard condominiums is that proposed standard condominium units can be marketed to potential unit purchasers prior to obtaining draft plan approval from the approval authority (this is also the case with common elements condominiums and phased condominiums).

Also, pursuant to the regulations, the municipality is not required to provide notice of a public meeting for the approval of a standard condominium plan to the surrounding community nor is any circulation to any agencies required. This factor may increase the efficiency of the development.

The Downside of Standard Condominium Plans

The buildings in a standard condominium plan must all be built at one time, without phasing, therefore substantial construction capital may be necessary at the outset of a project, especially if marketing of the units is slow. Phasing the condominium plan offers a solution to this issue, and will be discussed in the following blog.

Finally, pursuant to the Tarion New Home Warranties Act a developer is required to post security to enroll the condominium in Tarion. Registration with Tarion must occur at least 30 (thirty) days before construction begins.

In our next blog post, we will discuss phasing of standard condominium plans.

Ontario’s Condominium Act, 1998( “the Act”) provides for different types of condominiums, which in turn allows developers to utilize a condominium plan which is best suited to their needs. These variations include vacant land, leasehold, common elements and standard condominiums. Only standard condominiums can be phased although there is hope the ability to phase condominium plans will be extended to other types of condominium in the expected updates to the Act. The type of condominium development undertaken by a developer will vary based on a range of factors including the type of interest held in the land, intended future use and development plans. It is important to be aware of the various positive and limiting aspects of each form of condominium when undertaking a development project in order to insure an efficient and successful project.

Vacant Land Condominium Plan

A vacant land condominium plan (“VLCP”) refers to a condominium plan that contains at least one unit with no structures on it at the time of registration of the declaration and description (the documents that are registered to create the condominium).

A VLCP allows the condominium plan to be registered on the land before structures are constructed on all of the units. In other words, what usually presents as a vacant “lot” is the unit, and the common elements are made up of any other parts of the plan outside the units such as for example, roads, visitor parking, sewers, recreational facilities etc.

Pursuant to the Act, the following qualifications must be met in order to register as a VLCP:

1. No unit in a VLCP can be part of a building;

2. If at the time of registration of the condominium, a unit in the VLCP contains any structure, the structure must be within the boundaries of the unit and cannot “straddle” a unit boundary. For example, a foundation for a town home block cannot be in place at the time of the registration of the vacant land condominium plan as it would constitute a structure crossing a unit boundary; and

3. Units in a VLCP cannot be stratified. This restriction does not preclude the construction of multi storey buildings on units in a VLCP. Rather, it prevents having units above or below each other.

VLCPs are generally intended for the development of units containing single buildings, whether they happen to be residential, commercial or industrial. However, town homes can be constructed on a vacant condominium plan. The foundations cannot be put in place until after condominium registration because of wording in the regulations to the Act.

If there are incomplete common elements at the time of condominium registration the municipal approval authority may allow the condominium plan to be registered but the approval authority is obligated to take sufficient security from the developer to ensure the common elements will be completed at a later date.

Money Matters

As any experienced developer will tell you, Tarion New Home Warranty enrollment fees for condominium projects represent a significant cost for residential developments. Tarion can require security of up to $20,000.00 for each proposed condominium in a standard condominium plan. The good news in regards to VLCPs is that Tarion treats these condominium units as a freehold homes, therefore no Tarion security is necessary for the common elements in the condominium. That being said, while Tarion doesn’t provide any warranty on the common elements of a VLCP, it will in almost all cases continue to apply to the new homes which are constructed on the units.

Upon completion of construction of the buildings on the condominium units, maintenance and repair obligations regarding each unit fall to the owners of the unit, not the condominium corporation. The Act prohibits the condominium from doing any maintenance or repairs with respect to a vacant land condominium unit unless the owner fails to do so.

The Act also makes all insurance obligations with respect to the unit the responsibility of the unit owner. While the unit owners are responsible for the units themselves, the vacant land condominium corporation remains responsible for the common elements.

Take Home

Positive aspects of VLCPs include:

registering the whole condominium at one time, prior to building

sales agreements for new homes on a VLCP can be closed as soon as construction is completed because the unit is already registered within the condominium; and The builder does not have to wait for condominium registration or a phase to register.

developers are not required to post security to Tarion to enroll the condominium in Tarion.

all units must be registered at once, and once registered the lot and parcel sizes are fixed;

no sales agreements can be finalized until the draft plan of approval of the proposed condominium is complete and construction cannot begin for any structure (such as town home) that will straddle a unit boundary until the condominium plan is registered, meaning all conditions placed on the draft plan must be met prior to such construction. Single family home construction that will not straddle a unit boundary is not affected by this restriction. ; and

the inability of the condominium to insure any part of the units may result in the buildings having inadequate insurance which can result in serious repercussion in the event of a fire or other damage particularly if the units are semi-detached homes or townhomes.

In Part Two of this blog series we will discuss the pros and cons of standard phased condominiums.